Rupee steady at over 1-year high; State banks curb gains

Friday, 11 July 2014 01:25 - - {{hitsCtrl.values.hits}}

REUTERS: The rupee ended steady at highest in more than a year on Thursday as inflows from remittances and exporter dollar sales was offset by mild importer demand for the greenback and dollar buying by state banks. The rupee ended at Rs. 130.23/24 per dollar, its highest level since 27 June, 2013, Thomson Reuters data showed. “We expect the rupee to gain further, because there is no pick-up in imports,” a currency dealer said. The one-month forward premium fell to 10/20 cents, the lowest since 19 August, 2011, compared with Wednesday’s 22/28, with dealers citing expectations of further gains in the currency for the fall. Dealers said State banks were buying dollars at Rs. 130.23 levels and preventing sharp gains, though forward premiums were coming down with increased forward selling. Dollar purchases by two state banks helped curb volatility by mopping up liquidity and smoothening transactions, dealers said. The Central Bank usually directs the market through the two State banks, but dealers said they were not quite sure if the State banks were buying for the Central Bank. Central Bank officials were not immediately available for comment. Dealers said the fuel import bill, which accounts for around 20% of monthly imports, is also on the decline because the country has been shifting to alternative power sources such as coal and hydro.

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